In December, Pakistan received ¡Generalized Scheme of Preferences (GSP) Plus status from the EU increase access to the EU market through duty free imports of GSP-eligible products. The new British high commissioner to Pakistan, Phillip Barton, speaks to Upper Reach about the impact of this newfound status and Britain’s role in pushing for it at EU level. He also speaks of his three top priorities as the newly appointed high commissioner: improve the already broad and deep relationship between the two countries particularly by promoting further cooperation in the fields of education and security
The recent elections here in Pakistan have marked a true landmark in the history of the country and many investors are hoping that the country can finally make progress in some of the vital challenges that are ahead. From your point of view, what is the path forward for Pakistan or how do you see the economic performance of Pakistan during the next few years?
I think Pakistan is set to grow strongly and there are real opportunities here. As you said, there was a historic democratic transition last year, the first one in Pakistan’s history; the government completed a full parliamentary term and then handed over power to a democratically elected new government. And I think the British experience—and our view of the world—is that countries that are democratic are stronger and are more likely to be successful, including economically.
The new government’s Prime Minister, Nawaz Sharif, came in on a very clear platform for economic reform and the desire to make real strides in tackling some of the structural problems in the economy, such as energy shortage. I think we’ve already seen some real progress. They inherited a difficult situation; early on, they agreed a macro economic programme with the International Monetary Fund, which we support.
They’ve gone through two reviews with the Fund and the programme is on track and we’ve seen in recent weeks, both the government and IMF revising up the growth forecasts for 2014 and revising down the inflation forecasts; so that says to me that the economy is moving in the right direction. They’ve also set a plan to tackle energy shortages, and that in itself offers some important commercial opportunities for external investors, including the United Kingdom, so I think the economy is poised to grow over the next few years.
Do you see this time they have a more detailed plan to move forward?
I think there is a clear plan and it’s partly reflected in the IMF programme, it’s partly reflected in the government’s overall approach. Their platform is a business friendly one and they definitely listen to business from the business perspective.
I think it would be wrong of me to ignore Pakistan’s regional situation and one thing that is very clear is that their overall policy in the region is one of non interference in other countries; they want good relationships with their neighbours, most notably with Afghanistan and India. That’s very important because, firstly, if you have stability in Pakistan’s neighbours, that obviously has an impact on the stability and internal security of Pakistan itself, which is important for economic and investor confidence.
Secondly, as we see trade opening up particularly with India, I think that can be a real motor for the economy here; Prime Minister Nawaz Sharif has very clearly set out a vision of boosting trade with India, and a big part of that is liberalising the trade regime, which has been the subject of ongoing discussions with the Indian government.
You’ve been recently appointed as High Commissioner here in Pakistan, which is actually one of the most sensitive places within the Commonwealth, what are your mid to long-term goals that you wish to accomplish here?
I see three priorities for my work. The first thing to say is that the UK has a very deep and broad relationship with Pakistan and so our work here is also very broad and touches on many different sectors. And just to illustrate that, there are 13 different UK government departments working here in the High Commission, under me as the government’s representative. I think that reflects the breadth of our business. Within that, my priorities are firstly trade and the commercial relationship.
During Prime Minister David Cameron’s visit here last summer, he and Prime Minister Nawaz Sharif agreed that we would increase our bilateral target for trade and investment to 3 billion pounds by next year; that is a challenging target but I think we can meet it, so I’m making that a personal priority.
Secondly, my focus is on the education sector and we have made that a priority for our development assistance to Pakistan. We did that because there is a widespread view that there is an education emergency in this country. If you look at statistics, Pakistan is not really in a good place in terms of education.
Globally, Pakistan has the second highest number of out-of-school children. Some progress has been made, due to the efforts of the government, civil society and private sector education. We’ve also invested intensively in education and by the end of 2015, DFID support will have benefitted at least 4 million primary school children in Pakistan.
We have a particular focus on girls, which is important for empowerment, and important for social development. We are not only getting more children into schools but also improving the quality of the education that they receive in those schools, at both primary and secondary level. Our two other education priorities are delivered through the British Council, which is a cultural body working here in Pakistan. The first of these is the British Council’s very significant programme to deliver examinations. It’s an industrial size delivery of exams and that’s important, because this gives Pakistani young people internationally recognised secondary school level qualifications, from UK examining bodies through the British Council.
The Council’s second area of work, which is also very important, is at university level, helping to build up the university sector here in Pakistan. So, for example, around 95% of the rectors of Pakistani universities have being trained in the UK. We form linkages between British and Pakistani universities and we try to build up institutional capacity within the university sector.
So we are working at all levels of education, because we have a very straightforward view: how the children, the young people, and the students of Pakistan are educated will determine the future of this country. It’s a vital sector. So education is my second priority.
The third I think is security, because the truth is that the security of Pakistan impacts on the security of the United Kingdom, and the success of the government and the authorities here in dealing with their own internal security problems is a vital interest for us in the UK. It’s clearly a more immediate and vital interest for Pakistanis, but it’s of vital interest for us too. We are working with the government of Pakistan; we support their efforts to tackle terrorism and violent extremism, and we’ll continue to do that. We are encouraged by the approach that Nawaz Sharif’s government has taken.
They’ve just unveiled a new national internal security policy and we will be supporting them in trying to help deliver that across the country. Security is important. It is the third thing I’d highlight. There’s a whole raft of other things ranging from Afghanistan through migration and these sorts of issues that we work on as well, but these to me personally, these are the three things I’d highlight as my priorities.
Regarding the trade situation, do you believe that the GSP-plus status will change the panoramic? How did the UK help Pakistan to reach this GSP-plus status?
Firstly, I think it’s already making a difference. I think we are already seeing Pakistani companies winning increased orders from Europe for textiles in particular, as a result of the GSP-plus decision. And I think that will only grow. So I think it’s a real opportunity. We need to make sure that Pakistani companies are well placed and aware of what the opportunities are, and make the best of them, partly in the wider European market but also obviously in the United Kingdom.
In terms of our role: within the European Union I believe that we are the country with the closest relationship with Pakistan, for reasons of history, for reasons of the diaspora in the UK.
And so, following Pakistan’s return to democracy in 2008, we always saw the strategic importance of supporting a new democratic Pakistan; political support was important, but it was also important to look at how to make our support real and tangible, and economic and trade support is something which makes a real difference to people’s lives.
So we saw the importance of it early on after Pakistan’s return to democracy and our role has been to be a bit of an advocate, with our European colleagues, for Pakistan to be granted GSP plus and that’s what we’ve done over the last few years. Actually you make the case. It’s in Europe’s interest, not just in the UK’s, it’s in Europe’s interest for there to be a stable Pakistan. We’ve helped to make that case in the councils of Europe.
And it took a few years, right?
It took a few years. As in all trade negotiations, there are people who think “I will lose business if this happens” and they resist. This is a classic. But in any trade deals there are always some losers. Free trade makes it a lot better – collectively you’re better off – but there are always a few losers, and sometimes there are powerful lobbies, so it just takes time sometimes.
We were already with some textile companies like Sapphire Group, and they were already making huge investments in machinery and it was the best news for them, so I think there’s a whole new spirit and the Pakistanis are very grateful towards the UK. How do you feel about the UK companies working here in Pakistan and of their performance?
There are some big companies and big investments. Companies like Shell, GlaxoSmithKline, Standard Chartered Bank, they’ve been here for a long time. I went to meet many of them before I came here and what they said to me was that they do very good business here and they’re here for the long-term. They, like all businesses in all countries, sometimes have issues with government decisions or regulatory decisions, just like anywhere else. They’ve made long-term investments here, which I think is good business, and they will carry on with those.
There’s also a raft of other, smaller, companies doing business here – around 100 British businesses at the moment – and we’re seeing that grow. I was very struck when I went to the Dolman Mall in Karach; there’s Next, Debenhams, Accessorise – if you want to get your haircut you can go to Toni & Guy. These are companies you see if you go to a shopping mall in London.
It’s very striking. And I think we are seeing that growing, and we’ll see it spreading to other cities; I also think we’ll see more British companies coming in in the retail sector.
I talked a little earlier about the energy sector and I think we’ll see British investments over the next few years in those sorts of sectors as well. And as the economy starts to pick up, I think there will be more of these opportunities. I think we are very well placed. A particular group I hope that we’ll also be able to leverage in the business sector is the British-Pakistani community.
Many of them are very successful businessmen within the UK or within Europe, and that gives the UK and Pakistan an advantage because they can be a commercial bridge. I’ve seen in my time here, some British-Pakistani businessmen who know Pakistan, know how they can get business done here, coming and looking at very serious business opportunities. So, if you like, it’s a kind of reverse investment. They’ve become successful businessmen in the UK and are now coming back to what was their parents’ home or in some cases their own home originally, and I think that will help also build up the bilateral commercial relationship.
Speaking about investors’ confidence, as you were saying, returns in Pakistan are really handsome and this is something that scarcely gets to the headlines in the UK. What would you say about—you’ve been here in the past, you’re going to stay here for a while—for you what is the main difference in the perception of what Pakistan really is and what Pakistan stories talk about?
Firstly, on the security side: yes, there are security challenges for everybody here, whether they are Pakistani or a foreign investor, or a diplomat, so I don’t want to pretend there’s not a security challenge here. But actually businesses can still operate and do still operate, and I think the government, together with the military, is very serious in its desire to tackle violent extremism and terrorism. It’s a challenging thing to do.
I think people should not think that there are bombs going off every day of the week in every major city of Pakistan, because that’s just not the case, that’s not how the country is. I mean, there is a security issue but it’s not insurmountable to do business here if you’re British. Secondly, I personally think it’s a business friendly environment and it’s going to get friendlier, because the government is very committed to removing barriers to business and cutting down red tape. It’s already, I think, one of the more liberal countries in South Asia, for example, in terms of companies’ ability to repatriate profits. So, there’s already a reasonable business environment and I think it will get better.
Where do you see Pakistan going then? I mean, it has population of 180 million plus, it has a huge labour force that is very affordable, and it has a lot of room to grow. However it is next to the two giants in of China and India, so it’s hard but at the same time the opportunities are immense. What do you see for the future?
I’m an optimist. I think there are challenges and these challenges include the challenge of population growth. Actually, if you can get your economy going, countries with growing populations have an advantage. It’s true of the United States, it’s not true of Japan, it’s not true of most of us in Europe. So if you can get the economy going a growing population is an advantage. It’s important that you invest in young people so they come out of education with the skills they need to contribute. And that’s why education is a priority for us.
But I think a growing population can be a virtue rather than a vice, if you like. There are tremendous reserves of natural resources here, and huge unlocked potential in terms of regional relationships. So, if the Pakistani government, its neighbours and the international community can make a success of the vision of a more peaceful region, a better relationship with India, a more stable Afghanistan, then Pakistanis will really benefit quite significantly. At the moment, if you like, there’s an opportunity to be realised.